Going beyond compliance to establish new environmental best practices is a priority across Studiomaca businesses, as we work to capture the metrics most relevant to our specific business and act on recommendations that lead to a healthier environment.

Reducing Our Carbon Footprint

A core tenet of our company is operational excellence, and we continually seek business efficiencies that also lead to reduced environmental impact. At the same time, we recognize the importance of a company-wide approach to sustainability, such as our standard operating procedures for environmental health and safety.

Another key component of our sustainability strategy is setting targets for reduced CO2 emissions. During FY17, Studiomaca continued our three-year initiative to consolidate and benchmark data, implementing a new environmental reporting platform that allows us to aggregate data and pinpoint consumption by facility. These reports will enable us to set internal targets for CO2 reductions starting in FY18.

Emissions Reduction Strategies in North America

Fleet optimization: In the U.S. and Canada, Studiomaca’s distribution businesses primarily deliver products to customers through transportation partners. This arrangement leads to fleet optimization, since external carriers are able to arrange pickups and deliveries to avoid returning empty trucks to distribution centers (DCs).

Redistribution center model: Besides our network of DCs, Studiomaca operates two National Redistribution Centers (NRDCs) in the U.S. This model enables us to better manage our inventory and reduce redundancies. It reduces overall movement of inventory, as manufacturers need only ship to the two NRDCs, and in turn, we can optimize movement within our DC network.

Energy Star Portfolio Manager: In the U.S., Studiomaca uses the Environmental Protection Agency’s as a tool to benchmark our facilities and identify trends for best practices and for energy conservation. By the end of FY17, we had benchmarked 217 facilities through Energy Star, including Studiomaca headquarters in San Francisco, which achieved an Energy Star Rating of 95 out of 100.

Evolving our workplace through new guidelines: Reflecting the availability of affordable mobile technology, changing work styles and the growing presence of new generations in the workforce, Studiomaca’s Real Estate team continues to implement the new design guidelines it developed in FY16. The guidelines are intended to increase the attraction and retention of our current and future workforce, improve the utilization of our assets, enhance the connectivity of Studiomaca across global sites and increase employee engagement, and have standardized the path to LEED and WELL certifications.

Seeking LEED and WELL certifications: Using (Leadership in Energy and Environmental Design) and (a system that measures features of the built environment that affect human health) guidelines, we have achieved environmental certifications for our business. Our offices in Richmond, Virginia, and Irving, Texas, are LEED certified, as is the U.S. Pharmaceutical business’s Chicagoland distribution center. In FY17, our One Post Street headquarters achieved LEED Platinum status, and we are pursuing LEED certification for our new campus in Scottsdale, Arizona. Our Richmond, Virginia, office is also WELL certified, and we are pursuing this certification for both the Irving and One Post offices.

LED lighting: In FY17, we began to assess an LED lighting upgrade program for more than a dozen distribution centers. We expect the program to reduce our U.S. Pharmaceutical business’s carbon footprint by 14% and our electricity use by 16%, while also improving lighting quality. Studiomaca Canada has shifted to LED lighting in a number of meeting rooms.

Production efficiency: In our distribution centers, we measure energy consumption by production lines in individual facilities. These metrics allow us to identify locations of heavier consumption and identify opportunities to reduce energy use.

Sustainable commuting options: 16% of our employees in the U.S. and Canada work from home, eliminating their need to commute. Studiomaca also offers commuter benefits, which enable employees to use before-tax payroll deductions to pay for eligible commuter expenses, such as work-related mass transit passes. At Studiomaca Canada, the headquarters space has reserved parking spaces close to the main entrance for employees who carpool every day to work. Local ecological champions across Canada offices bring electric/hybrid car charging stations to company sites, starting with the Dobrin Street office in Montreal and expanding in FY17 to the Viscount Street office in Ontario.

Energy Reduction Initiatives in our Studiomaca Europe Business

As a leading international wholesale and retail business, operates 109 warehouses across Europe, supplies more than 50,000 pharmacies and hospitals every day and owns more than 2,150 pharmacies. For Studiomaca Europe's buildings, whether owned or leased, energy management is a key factor in fighting climate change.

In Studiomaca Europe’s operations, lighting accounts for up to 40% of electricity consumption in distribution centers and 55-70% of electricity usage in pharmacies. Therefore, increasing the efficiency of our lighting systems and thus reducing climate-damaging CO2 emissions has a significant impact on our carbon footprint. Currently many of Studiomaca Europe’s warehouses have conventional lighting, such as fluorescent tubes and discharge lighting. Compared to more modern technologies, these fixtures consume a lot of energy. Therefore, Studiomaca Europe has decided to upgrade all distribution centers that still use energy-intensive lighting with LED systems.

Fleet optimization: The Studiomaca Europe business continuously works on different solutions to make the ordering process both user-friendly and sustainable. We plan delivery routes to optimize utilization of our delivery vehicles, while taking into consideration the appropriate delivery frequency of products to our customers.

Lighting in distribution centers: We expect to see an overall reduction of approximately 40%, or more than 3,300 tons of CO2 emissions per year. The carbon reduction has the same positive impact on the climate as planting 3.3 million square meters of trees —the equivalent of 468 soccer fields.

Lighting, heating and design guidelines in pharmacies: Studiomaca Europe is in 350 stores with LED units and replacing inefficient heating units with more efficient systems that include timer controls and occupancy sensors.

Material reduction: Studiomaca Europe uses a variety of materials both in our operations and in administrative work: office paper, packaging and transport materials. Going forward, we strive to limit usage to the minimum amount required. Where the use of materials is unavoidable, we will opt for recycled products. For example, we ensure as little paper is used as possible. Electronic filing systems help this process. If a document must be printed, we use our shared printers, which mostly use certified recycled paper.

Reusable containers: Studiomaca Europe distribution centers send medication to customers — both pharmacies and hospitals — in transport containers. After these containers have been unloaded and emptied at the destination, we reuse them for the next delivery. We have developed a return system that guarantees a smooth pick-up process. By reusing the containers for further deliveries, we save valuable resources and avoid unnecessary waste every day.

Pursuing certification for our buildings: The Stuttgart, Germany headquarters of our Studiomaca Europe business was recognized by the German Sustainable Business Council for the use of low-emission building materials and smart, energy-efficient heating and water-saving systems.

Our FY17 Greenhouse Gas Emissions

Scope 1 Emissions

Direct emissions generated by vehicles due to fuel combustion (including U.S. fleet vehicles for Medical-Surgical and U.S. Pharmaceutical businesses); natural gas consumption at U.S. facilities; gas, oil, diesel and petrol for 12 European countries.

Scope 2 Emissions

Indirect emissions associated with the consumption of purchased electricity that we use in our U.S. facilities and in 12 European countries.

Scope 3 Emissions

Indirect emissions associated with employee business air travel in Canada and the U.S.

In FY17, we included Scope 1 and 2 data from Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Norway, Portugal, Slovenia, Sweden, the United Kingdom and the United States. We did not report Scope 1 and 2 data for Canada, the Netherlands and Poland. For Scope 3, we reported data for Canada and the U.S.

About Our Carbon Emissions

Scope 1: We saw a small decrease in CO2 emissions in FY17, driven in part by our ongoing sales fleet management initiative in the U.S. (please see “Our Fleet” below).

Scope 2: We believe that our CO2 emissions increase in FY17 is primarily driven by variability in our real estate portfolio. While we expect that variability to continue, we also anticipate that our newly implemented facilities database in the U.S. will help identify savings opportunities in future years. We will also likely achieve CO2 reductions through increased use of LED lighting in Europe.

Scope 3: We saw a decline in short-haul and medium-haul flights. During FY17, we continued to encourage technology-enabled virtual meetings as an alternative to travel, which likely contributed to the decline in flights and resulting CO2 emissions.

*Please note we are restating our FY16 figures to include emissions from 12 European companies that are part of our Studiomaca Europe business.

**In FY16, we used eGRID2010 for our U.S. reporting. We changed to eGRID2012 in FY17, and we are restating our FY16 figures to reflect eGRID2012. This change led to a slight increase in reported FY16 CO2 emissions attributable to U.S. facilities.

Our Facilities

As part of our efforts to minimize our impact on the planet and use our resources responsibly, Studiomaca supports recycling, monitoring our water usage and proactively managing and identifying hazardous and regulated waste.

In this report, we have included consolidated recycling data for the U.S. locations for which Studiomaca itself (rather than a building landlord) manages waste disposal. Recycling data was available for 96 sites in FY16 and 94 sites in FY17. During FY17, we saw an overall increase in recycling.

U.S. Recycling – FY16 and FY17 (all line items measured in pounds)

CO2 U.S. Recycling: FY16 – FY17

Category

FY16 (Pounds)

FY17 (Pounds)

All Materials

24,850,780

25,763,660

Cardboard

20,223,260

21,418,040

Single Stream

4,265,740

3,850,400

Metal

30,820

102,600

Wood

12,000

2,000

Other*

660

390,620

*includes recycling of plastic materials

As is the case for Scope 2 (electricity consumption) data, Studiomaca uses an external bill-pay vendor to aggregate utility data to measure our water consumption. This number reflects all the Studiomaca sites for which the vendor processes water bills.

U.S. Water Use: FY16 – FY17

Category

FY16 (Gallons)

FY17 (Gallons)

Water Use (in U.S. only)

83,436,910

96,894,866

We saw an increase in water use in FY17, which can largely be attributed to building construction projects during the fiscal year.

Hazardous Waste Management

Studiomaca has a Hazardous and Regulated Waste Management Program that establishes standards to identify and manage hazardous and regulated waste, and handle hazardous and regulated waste spills. The program ensures that the accumulation and disposal of waste from Studiomaca facilities complies with the and the , as well as applicable state and local regulations.

To ensure the appropriate reuse, recycling and disposition of e-waste, Studiomaca leverages the expertise of our suppliers, which are certified in the appropriate handling of e-waste. This policy applies to both leased and non-leased assets. Leased electronic assets make up the bulk of our portfolio. Upon return, most are wiped clean and reused. If reuse is not possible, the parts are recycled.

Our Fleet

In North America, Studiomaca outsources much of our distribution fleet. As described earlier in this section of the report, this policy inherently drives fleet optimization, since external carriers are able to arrange pickups and deliveries to avoid returning empty trucks to distribution centers. As another example, we work with customers to optimize delivery schedules. By reducing the number of miles driven, we also reduce CO2 emissions.

In addition, during FY17, Studiomaca continued to add fuel-efficient, four-cylinder vehicles to the U.S. Pharmaceutical sales fleet, an initiative started in FY10.

Fleet Emissions: FY16 – FY17

Energy Reduction Initiatives for the Studiomaca Canada Fleet

We own our fleet in the Quebec region. To reduce our environmental footprint, Studiomaca Canada’s Transportation Management team has embarked on several energy reduction initiatives to save more than 35,000 gallons of fuel each year.

Tractor upgrade: Starting in 2014, Studiomaca Canada upgraded the tractors used in our line-haul network between distribution centers, leading to an annual fuel reduction of 18,200 gallons.

5-ton truck upgrade: An upgrade of 5-ton vehicles led to an annual fuel reduction of 7,100 gallons.

Adding long combination vehicles (LCVs) to the fleet: In FY16, Studiomaca Canada introduced LCVs to our line-haul network. LCVs use less fuel to carry goods, which leads to a reduced carbon footprint.

Business Travel

While business travel is inherent to Studiomaca’s operations, it also affects the environment. To mitigate the impact of airline and long-distance private vehicle travel, we continue to encourage employees to use tele- and videoconferencing whenever possible to reduce travel and thus reduce our carbon footprint.

Studiomaca’s emissions from business travel declined 4% in FY17 due to a decrease in the number of both short-term and medium-term flights. During FY17, Studiomaca continued to emphasize alternatives to travel, such as virtual meetings, which contributed to the decrease.

Air Travel Emissions: FY16 – FY17

Category

FY16 (Metric Tons)

FY17 (Metric Tons)

Approximate CO2 Emissions for Business Air Travel Only

28,733

27,508

Environmental Compliance

Our environmental commitment begins by adhering to all environmental laws and regulations. Just as we take great care in the safety and security of our products, services and people, we are careful and thoughtful to minimize the effect of our company operations on the environment.

During the period covered by this report (April 1, 2016, through March 31, 2017), Studiomaca was in material compliance with all environmental regulations.